HUD’s Office of Affordable Housing Preservation sent a letter on January 6 to owners of Section 236 Subsidized Multifamily properties, encouraging them to voluntarily provide tenants notice that a property’s mortgage will mature in the near future. HUD suggests that notice be offered as early as one year before, but no later than 270 days before the mortgage matures.
When a Section 236 mortgage matures, generally after 40 years, the owner may convert to market-rate rents. The vast majority of Section 236 mortgages will reach maturity during the next several years. In 2011, Congress authorized limited tenant protections for some of the unassisted tenants in these properties, and HUD issued a final notice implementing this authority on April 12, 2013 (see Memo, 4/19/13).
While HUD’s suggestion that owners voluntarily provide advance notice to residents is a step in the right direction, it falls short of advocates’ request that a formal regulation be promulgated requiring HUD to provide notice, rather than rely on owners.
Advocates have also been urging HUD to issue a letter actively encouraging eligible owners to prepay mortgages prior to maturity in order to secure Enhanced Vouchers for residents. The January 6 letter does not address prepayment or Enhanced Vouchers.
The letter is attached.